Why Are Overdraft Fees Legal?

[NickD 203]

Topic question is:

Why Are Overdraft Fees Legal?

Does this mean that overdraft fees should be illegal? No one is twisting your arm to use any bank, it's a private business you can either deal with or not. All have different services and fees. Your fault if you deal with any business without knowing what you are getting into. Even though I have dental insurance, still got a quote from my dentist before proceding and wanted to know exactly what he was going to do. Dentist and doctors can also screw you, matter of fact, everybody is trying to screw you, it's the American way. Attorneys will really screw you, will screw you blind.

Do you really need your government to protect you? They can screw you more than anyone.

[I AM NOT THAT GUY 5,715]

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Well... $3 in 1977 is about $11 in 2009 dollars.

I think he is referring more to Bernie Madoff type of risk than the normal risk that investment banks take.

Ponzi schemes are already illegal - you don't need new regulations to prosecute the likes of Bernie Madoff.

What happens when the government, as the peoples agent, is the perpetrator of the scheme, i.e. Social Security?

[mawilson 2,133]

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Well... $3 in 1977 is about $11 in 2009 dollars.

$11 is a hell of a lot less than $35, which is what many banks charge.

Yes, but today...

• debit cards are free (unlike checks)
• many (most?) popular credit cards have no annual fee
• you can pay your bills online for free - don't even need a stamp!
• most banks offer free checking accounts (with some restrictions, e.g. minimum balance)
• you can check your balance online for free 24/7

None of the above was true in 1977. Still, some people manage to go negative.

[I AM NOT THAT GUY 5,715]

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Well... $3 in 1977 is about $11 in 2009 dollars.

$11 is a hell of a lot less than $35, which is what many banks charge.

My bank charges $10, and forgives 1 a year. I have 2 freebies in reserve.

In the 70's, Crocker Bank used to charge $18 for a returned check.

Edited September 24, 2009 by Mister_Bill

[mawilson 2,133]

What happens when the government, as the peoples agent, is the perpetrator of the scheme, i.e. Social Security?

The government is then responsible for winding it down - either by increasing the number

of people paying in and reducing the number of people receiving benefits, or cutting

the benefits.

Unlike Madoff, Social Security never guaranteed a 10% annual return on your investment.

[Heracles 417]

Can anyone do interbank payments / transfers here? For example, pay someone else directly from their account. I know you can setup a transfer to your own account at another bank, however, I believe a payment to someone else must go through as a telegraphic transfer; yes even to another bank in the US.

If I wanted to send someone money in Aus, all I would need to do is find out their routing and account number and I could send it for free directly from my account, to their own. No checks needed. Actually I had not seen a check in seven years prior to moving here.

Edited September 24, 2009 by Booyah!

[NickD 203]

One thing for sure, very difficult if not impossible to overdraw if you pay for everything by cash.

[one...two...tree 2,762]

Can anyone do interbank payments / transfers here? For example, pay someone else directly from their account. I know you can setup a transfer to your own account at another bank, however, I believe a payment to someone else must go through as a telegraphic transfer; yes even to another bank in the US.

If I wanted to send someone money in Aus, all I would need to do is find out their routing and account number and I could send it for free directly from my account, to their own. No checks needed. Actually I had not seen a check in seven years prior to moving here.

There's a fee for that too.

[SuperDuper! 230]

Or you could just keep better records of what is in your account so you don't over-spend, or have over-draft protection linked to your savings account.

Who pulls out their checkbook log every time they use their debit card? Might as well write a check.

Regardless...it doesn't justify banks charging multiple, compounded fees. That should be illegal.

As an investor in large banks, I love it that they charge for all those fees to folks who can't balance a checkbook, or don';t pull out enough cash at their home ATM. I never get penalized at the bank 'cause I never bounce a check or take out a loser payday loan or go to 7-11 ATMs.

ps, it's called free-market capitalism.

Cheers.

[The_Dude 1,142]

Can anyone do interbank payments / transfers here? For example, pay someone else directly from their account. I know you can setup a transfer to your own account at another bank, however, I believe a payment to someone else must go through as a telegraphic transfer; yes even to another bank in the US.

If I wanted to send someone money in Aus, all I would need to do is find out their routing and account number and I could send it for free directly from my account, to their own. No checks needed. Actually I had not seen a check in seven years prior to moving here.

There's a fee for that too.

Depends on what bank. My bank does not charge me for transfers.

[Heracles 417]

There's a fee for that too.

Yep of course. It's no coincidence that in this digital age they 'encourage' you to use checks. If you bounce a check or overdraw because someone cashes it late, the fees pile up. The other party pays a fee too. Whereas if you had a [pay anyone] feature like every bank offer in AUS, you would totally avoid that. Once again, this sort of stuff is regulated there by the ACCC.

------------

Australian Competition and Consumer Commission - an independent statutory authority. Public enemy #1 for dodgy companies and practices.

The ACCC promotes competition and fair trade in the market place to benefit consumers, businesses and the community. It also regulates national infrastructure services. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws..

-----------

Unlike Canada, Australia has states rights like the US. As such, the federal Trades Practices Act over there provides consumers with quite a bit of federal protection from unscrupulous and unethical business practices. Something Matt claims can never happen and should not be regulated against. It stops what is permitted here, were banks base their credit divisions in states with lenient laws that are then used to screw everyone else around the country. EG Delaware and South Dakota.

The biggest difference is clearly in attitude. To some here, a business ripping you off is capitalism. Whereas in Europe, Canada and Aus, a business must earn a legitimate dollar. Earning money from deception is not acceptable.

Edited September 25, 2009 by Booyah!

[one...two...tree 2,762]

Or you could just keep better records of what is in your account so you don't over-spend, or have over-draft protection linked to your savings account.

Who pulls out their checkbook log every time they use their debit card? Might as well write a check.

Regardless...it doesn't justify banks charging multiple, compounded fees. That should be illegal.

As an investor in large banks, I love it that they charge for all those fees to folks who can't balance a checkbook, or don';t pull out enough cash at their home ATM. I never get penalized at the bank 'cause I never bounce a check or take out a loser payday loan or go to 7-11 ATMs.

ps, it's called free-market capitalism.

Cheers.

I realize the title of this thread is a bit misleading - forgive me...I merely copied the title from the original article.

But the argument made here isn't whether banks should be allowed to charge overdraft fees. The argument is that those fees are exorbitant and how the banks handle deposits vs. debits works in favor of them being able collect.

When the NFL talks about tweaking the rules and regulations, they aren't trying to stifle the game. They're just trying to keep it fair. That's all this is about.

[Heracles 417]

As an investor in large banks, I love it that they charge for all those fees to folks who can't balance a checkbook, or don';t pull out enough cash at their home ATM. I never get penalized at the bank 'cause I never bounce a check or take out a loser payday loan or go to 7-11 ATMs.

ps, it's called free-market capitalism.

Cheers.

How's your share price?

[SuperDuper! 230]

As an investor in large banks, I love it that they charge for all those fees to folks who can't balance a checkbook, or don';t pull out enough cash at their home ATM. I never get penalized at the bank 'cause I never bounce a check or take out a loser payday loan or go to 7-11 ATMs.

ps, it's called free-market capitalism.

Cheers.

How's your share price?

Hmm, how did you know I was crying all the way to the bank? Bought WFC at $9.37 earlier this year. It's doing pretty good now. Money is just a way to keep score. Our real riches lie in the one's we love. Remember that.

Now, I do disagree with the LOAN SHARK rates that the credit card co's get away with, even though I always pay off the monthly balance. 45 years to pay off $8K balance if you pay the monthly minimum. Yikes!

[one...two...tree 2,762]

Now, I do disagree with the LOAN SHARK rates that the credit card co's get away with, even though I always pay off the monthly balance. 45 years to pay off $8K balance if you pay the monthly minimum. Yikes!

That's what I'm talkin 'bout!